• Virgil Nethercott

The Brokers Corner: Sellers

This is part 1 of a series titled "The Brokers Corner" intended for mobile home community asset owners beginning or preparing for their asset disposition. This series is written by a practicing broker that specializes in mobile home community assets.

If you are in the market to sell your mobile home community, I want to give you some free advice. First, let me set the stage for some characteristics of someone who might be about ready to sell:

You have owned your mobile home community for ten or more years. You know all the tenants in the community. You've had your fair share of work with bad tenants and even kicked several of them out during your tenure. You have heard every excuse in the book as to why rent can't be paid. You are a true LANDLORD.

Does this sound like you? Read on to learn the best way to get the most money for your asset when and tools to utilize.

There is no argument that you know how to make money as a landlord. You have proven it to yourself, your tenants, your family, friends, and colleagues over time.

Do you know who doesn't know this? The potential buyer of your mobile home community. Read that last sentence again.

If there is only one thing that you take away from this article, it’s that.


Selling your community is no different from getting a loan from your local bank's friendly loan officer.

Let's say that you walk into your local bank to apply for a new loan, whether for a credit line or a mortgage. Let's say that you know the loan officer in there, and you have worked with them for years, and for this argument, let's call that loan officer, Chuck.

You and Chuck have lived in the same town your entire lives. You even went to the same high school together. You might not have invited Chuck to your wedding, but you know Chuck's family, and Chuck's family knows yours.

When you apply for anything for any type of financing with that bank, there is a handful of items that they will request, but specifically, they want to know how much money you make, understandably. Then say how much money you make; Chuck has to verify everything you tell him by some type of proof beyond just your word. It usually goes something like this:

You, "I make $1,000,000 per year. That was last year's income."

Chuck, "Great, please send me your check stubs to show $1,000,000."

You, "Here are those check stubs showing $1,000,000."

Chuck, "I see those check stubs for $1,000,000. This is verified income."

Simple as that, Chuck isn't calling you a liar by asking for verification, and you aren't mad at Chuck for him asking to see proof, and you proceed forward with the loan request.

This scenario isn't any different when talking about an investment income property.

Sellers, no matter what you think about your property, if you want to sell it as "investment performing," you must prove to a buyer that it performs.

Once they have seen this verified income, they will justify the asking price through the cap rate valuation method. This method is the primary and only performance-based valuation method for mobile home communities. If you need more information on that valuation, please visit this page.

Another reason they could be asking is their financing institution needs to verify all the income information to loan them money to purchase the property, just like our friend Chuck did above.



So how do you get the most money when you go to sell?

It may seem counter-intuitive initially, but getting the most cash for your asset at the sale is to pay a real estate broker.

The 2nd article in this series goes more in-depth about commission agreements. It is a useful reference for what to expect.

Keep in mind that not all real estate brokers are the same: residential agents, commercial agents, and all agents have their strengths and specialties. There are specialties of all different asset classes, from triple nets to retail and even mobile home communities. Each of these three asset classes that I described is vastly different asset types, and each has elements about them that make them unique and challenging.

This point must be stressed when you hire a broker, there are very few brokers who specialize in the MHC asset class, and hiring just anyone can have detrimental effects on your valuation, and you won't even know it until it's too late. I'm not saying if you hire a non-specialized agent that they will intentionally lead you wrong. I am saying that they don't have the information about the market and asset class to guide you in the right direction.


The last item that I would like to address, once you have picked an MHC specialized broker you must communicate your concerns to them.

If you're concerned about competing parks knowing about your sale, tell them. If you are worried about family, friends, or tenants knowing about the sale, tell them.

Once your concerns are out in the open, the broker can tailor a solution to that problem, and it is usually straightforward to implement. This is their job every day of the week, and they are watching for things that you hadn't thought of yourself.

Any concerns that you might have, however big or small, can come to a solution between both of you. Each of my clients has had at least one specific request, and I was able to oblige them. It can be as small as excluding one particular person from viewing the deal, all the way to excluding online marketing entirely due to privacy concerns of the ownership.

I communicate concerns back to owners as well. My clients have come to expect and enjoy my constant lines of communication. It is one of my most spoke about quality as a specialized MHC broker. Not only do my clients expect regular updates, but they also trust that I will notify them if the market is responding differently than we initially projected. We need to make a change in the marketing strategy.



To conclude this part of the series, I would like the drive home three points that I mentioned above when you are getting ready to sell your asset.

Every seller needs to understand that they are expected to provide financial information on their asset's performance. No matter how intrusive it may feel, this is standard with all investment transactions, and you must realize all parties involved keep information like this protected with the utmost care when handling it. Most potential buying entities understand the ownership side of investments and respect their fellow owners' knowledge.

The second point I would like to reiterate is the need for a specialized broker, especially in the MHC asset class. The brokers, such as myself that specialize in this asset class, understand all the asset's performing factors and know the items to request. Specialized brokers will save you a lot of time and headaches. Not only that, they know valuations in their region down to a science. You will find much more information on a local internet search or multiple listing service that local real estate agents access. The difference of three points of a cap rate can mean the difference in hundreds of thousands of dollars in lost or gain income.

The final point that I would like to say is to communicate. Your specialized brokers are very good at communicating with you and are happy to explain any jargon they routinely talk about. If you make it known to them about something you are concerned about, they will be glad to tailor a solution to fit your needs the best.


This piece was written for our quarterly newsletter by Virgil Nethercott, CCIM.


#VirgilBrooksInvestmentRealEstate#VirgilNethercott#CCIM#InvestmentProperty#MobileHomeCommunity#RealEstateLife#RealEstateBroker#RealEstateAgent#InvestmentProperty#BusinessBroker#Investment#CommercialRealEstate

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